Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income

Using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies. Amenities we consider are: improvements to areas of open space, recreation facilities and other public spaces; street cleanliness; restoration of derelict properties; and the provision of paths dedicated to cycling and walking. We include the spatial scope of the policy as an attribute, making the trade-off between environmental amenity and its spatial provision explicit. We employ a novel estimator for average willingness to pay (WTP) for mixed logit models with a random cost coefficient, which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in WTP space. We find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences, and that these effects are of statistical and economic significance.Non-market valuation, Discrete choice experiments, Local environment, Spatial analysis, WTP estimation, Urban planning

Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income

Using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies. Amenities we consider are: improvements to areas of open space, recreation facilities and other public spaces; street cleanliness; restoration of derelict properties; and the provision of paths dedicated to cycling and walking. We include the spatial scope of the policy as an attribute, making the trade-off between environmental amenity and its spatial provision explicit. We employ a novel estimator for average willingness to pay (WTP) for mixed logit models with a random cost coefficient, which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in WTP space. We find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences, and that these effects are of statistical and economic significanc

Valuing improvements in biodiversity due to controls on atmospheric nitrogen pollution

Atmospheric nitrogen pollution has severe impacts on biodiversity, but approaches to value them are limited. This paper develops a spatially explicit methodology to value the benefits from improvements in biodiversity resulting from current policy initiatives to reduce nitrogen emissions. Using the UK as a case study, we quantify nitrogen impacts on plant diversity in four habitats: heathland, acid grassland, dunes and bogs, at fine spatial resolution. Focusing on non-use values for biodiversity we apply value-transfer based on household's willingness to pay to avoid changes in plant species richness, and calculate the benefit of projected emission declines of 37% for nitrogen dioxide (NO2) and 6% for ammonia (NH3) over the scenario period 2007–2020. The annualised benefit resulting from these pollutant declines is £32.7m (£4.4m to £109.7 m, 95% Confidence Interval), with the greatest benefit accruing from heathland and acid grassland due to their large area. We also calculate damage costs per unit of NO2 and NH3 emitted, to quantify some of the environmental impacts of air pollution for use alongside damage costs for human health in policy appraisal. The benefit is £103 (£33 to £237) per tonne of NO2 saved, and £414 (£139 to £1022) per tonne of NH3 saved

Using discrete choice experiments to regulate the provision of water services: do status quo choices reflect preferences?

Discrete choice experiments (DCE) are increasingly used to quantify the demand for improvements to services provided by regulated utility companies and inform price controls. This form of preference elicitation, however, often reveals a high frequency of status quo (SQ) choices. This may signal an unwillingness of respondents to evaluate the proposed trade-offs in service levels, questioning the welfare theoretic interpretation of observed choices and the validity of the approach for regulatory purposes. Using the methodology for DCE in the regulation of water and sewerage services in England and Wales, our paper contributes to the understanding of SQ choices in several novel dimensions. First, we control for the perception of the SQ and the importance of attributes in day-to-day activities. Second, we use a split sample design to vary both the description of the SQ and the survey administration mode (online vs. in-person). Third, the service attributes can both improve or deteriorate, so that the SQ is not necessarily the least-cost option. Fourth, we examine SQ choices in individual choice tasks and across all tasks so as to identify the determinants of serial SQ choices. Our results suggest that individual SQ choices mostly reflect preferences and thus represent important information for the regulator. However, serial SQ choices are mainly driven by cognitive and/or contextual factors, and these responses should be analysed as part of standard validity tests

Using discrete choice experiments to regulate the provision of water services: do status quo choices reflect preferences?

ISSN:0922-680XISSN:1573-046